UK, Norway Push Offshore Electrification

UK operators are accelerating collective efforts to electrify oil and gas installations as they seek to replicate Norway's success in cutting the carbon intensity of its hydrocarbon production. Offshore platform electrification is quickly becoming an essential part of both government and operator plans to meet long-term net-zero goals. It is also seen as a way to boost the growth of renewables, including floating wind, and offshore transmission infrastructure. Further, it could be essential to improve the low-carbon credentials of several major UK oil developments now awaiting project sanction in the area West of Shetland. But hurdles remain: More clarity is needed from government on the regulatory framework for investment and the cost of retrofitting older facilities could run high. Offshore facilities require a lot of power from gas- or diesel-fired turbines for extraction and pumping processes as well as services for workers on board. In the UK, they account for over 10% of total power plant emissions and roughly 70% of upstream operational emissions. Supplying rigs with low-carbon electricity -- either offshore wind or onshore renewables -- could cut emissions and the carbon intensity of production sharply. Electrification efforts are seen as a key way to achieve goals set by the UK and Norway's oil and gas industries to halve operational emissions from production and processing by 2030 (NE Aug.27'20). And on the policy side, the UK government's multibillion-dollar North Sea Transition Deal pledged up to £3 billion ($4.2 billion) in joint government-private investment for electrification projects earlier this year (IOD Mar.24'21). UK Matures Projects Companies will continue to advance projects in the coming months. In the UK, there are about five or six projects at various stages of maturity running in two areas, industry lobby group Oil & Gas UK tells Energy Intelligence. In West of Shetland, there are three potential greenfield projects and a renewable power solution under study at the Sullom Voe terminal. Operators are also studying various solutions in the Central North Sea covering brownfield and greenfield electrification. The head of the UK offshore regulator, Andy Samuel, recently said work is under way to address specific regulatory barriers such as grid connections and offshore tariffs. The biggest scheme now in planning in the UK is a £10 billion ($14 billion) basin-wide floating wind proposal led by green infrastructure developer Cerulean Winds, which would electrify most current UK offshore assets and future production potential from 2024 if all goes as planned (IOD Jun.1'21). “There has been a lot of work going on behind the scenes for the last year to get the scheme ready for submission,” Cerulean tells Energy Intelligence. “Only a project of this ambition will reach the abatement targets set out in the North Sea Transition Deal -- a 25% [emissions] reduction by 2027.” The concept involves 130 floating wind turbines -- each 15 megawatts -- at one site in the Central North Sea and 70 turbines in the West of Shetland feeding power to offshore facilities. Excess power would be supplied to three integrated onshore green hydrogen plants, including one at the Sullom Voe oil terminal site. Potential investors will be watching for seabed leases and subsequent licenses to be granted. “No subsidies or CFDs are required from government -- it's about getting the certainty to progress,” Cerulean said. Crucial for FIDs With operators under pressure to ensure new oil developments meet low-carbon criteria, electrification could be essential for projects yet to be sanctioned, such as Equinor's Rosebank, Siccar Point's Cambo and BP's Clair South in the West of Shetland. Indeed, it is a key part of plans for a Shetland energy hub. Meanwhile, Royal Dutch Shell, TotalEnergies, BP and Harbour Energy are in the early stages of a joint study to electrify existing production hubs in the UK Central North Sea. “The scope of the project is still under development, and no decisions have been made,” the companies said. The UK offshore regulator has said it wants two schemes in operation by the mid-2020s. It estimates platform electrification could cut annual oil and gas emissions by 2 million-3 million tons per CO2 equivalent by 2030 -- or 20% of today's production emissions -- rising to 40% by 2030 as offshore production declines. The interim goal for renewable generation capacity is 30 gigawatts by 2030, up from just over 9 GW of offshore wind capacity in 2019, jumping to 70 GW-75 GW by 2050. Norway Accelerates Electrification Norway already powers eight electrified facilities connected to the shore via subsea cables supplied by green power, mostly hydroelectric, from its grid. That includes Equinor's giant Johan Sverdrup development. Another eight electrification projects have been sanctioned for start-up by 2023-24, accounting for 45% of Norway's total production. According to government-industry body Konkraft, platform electrification could cut annual emissions by 4 million tons/CO2e by 2023. Equinor has plans to at least partially electrify several more facilities and switch the Melkoya LNG plant from gas-fired turbines to the grid. But opposition to platform electrification in the Arctic Barents Sea is growing due to projected high costs, of which the state carries about 90% (PIW May21'21). Platform electrification was one of the key planks of a recent energy policy white paper, from Norway's center-right Conservative government, on replacing the direct use of fossil fuels. Further power and grid development will be needed to meet growing demand for hydropower from new onshore industries and offshore oil platforms, it states. The oil and gas industry, meanwhile, has a goal to cut absolute emissions from oil and gas output by 40%, over 2005 levels, to around 8.1 million tons of CO2 equivalent by 2030, and down to almost zero by 2050. In some cases where offshore wind turbines are used to power offshore oil and gas platforms, companies may qualify for petroleum tax relief if the wind units are deemed by authorities to be sufficiently linked to the production facility. Deb Kelly, London